Signs of Solyndra? Fisker Lays Off 75 Percent of Employees

Financial Deadline Looms

In April 2010, Fisker started receiving payments on a loan of up to $529 million from the Department of Energy as part of the Obama administration's push to bolster alternative energy firms. Fisker has been making repayments on the loan interest for several years, but the first sizeable repayment of the principle – an amount the company has not disclosed – is due at the end of April.

The loan to Fisker was part of a $1 billion bet the Energy Department made in two politically-connected California-based electric carmakers producing sporty -- and pricey -- cutting-edge autos. Fisker Automotive, backed by a powerhouse venture capital firm whose partners included former Vice President Al Gore, predicted it would eventually be churning out tens of thousands of electric sports sedans at the shuttered General Motors factory it bought in Delaware. The other major recipient of financial support, Tesla Motors, is backed by PayPal mogul Elon Musk.

Fisker launched the Karma with great fanfare, showing off prototypes of its sleek, quiet-running sports sedan at major auto shows and opening showrooms around the globe.

But in October 2011, ABC News aired reports revealing that the government loan to Fisker raised concerns among industry observers and government auditors, and added to questions about the way billions of dollars in loans for smart cars and green energy companies were being awarded.

In a 2011 interview with ABC News, Henrik Fisker, the renowned Danish auto designer who founded the company, issued a promise to U.S. taxpayers that they had no reason to worry about the more than $500 million in federal funds the government was getting set to bet on the company.

"No, I don't think they need to worry about it," Fisker said. When asked if Fisker might be the next Solyndra, he said, "Absolutely not."

When Henrik Fisker resigned from the company in March, the auto maker released a statement saying, in essence, that nothing had changed: "Mr. Fisker's departure is not expected to impact the company's pursuit of strategic partnerships and financing to support Fisker Automotive's continued progress as a pioneer of low-emission hybrid electric powertrain technology."

But the outlook has only appeared to get worse.

In December, the Wall Street Journal reported that Fisker board members had discussed the prospect of filing for bankruptcy, citing unnamed sources. Company executives responded by saying they were seeking larger partners for the small automaker.

For weeks following, there were widespread reports of a possible deal involving Chinese automakers. But a major Chinese manufacturer said those talks had fallen through. Last week came word in a report by Reuters that Fisker Automotive had begun consulting with bankruptcy lawyers.

That news came with less than a month before Fisker must make a significant payment on its U.S. Energy Department loan, which comes due April 22.

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